Using Land As A Hedge Against A Currency Collapse
Using Land As A Hedge Against A Currency Collapse
I'm going to buy raw land as a long-tailed hedge against a total currency collapse
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I purchased more physical gold yesterday. An insurance policy on a long-tailed macro event occurring. A sort of safety net for an all out economic catastrophe. A caveman style investment they used in the olden age when a currency collapsed and died.
Despite my constant fear that the U.S. dollar could collapse under the weight of an overlevered system, combined with a spend all find out how we pay for it later approach, gold and hard currencies only equal around 3% of my portfolio.
My philosophy on hard currencies is to own enough, where if an currency collapse occurs, you have one year’s worth of hard currency to cover your living expenses. I don’t account for rent or a mortgage payment in these living expenses as rent is usually fixed for one year and a mortgage is typically fixed over the entire life of the loan if you are based in the U.S.
Expenses I allocate for currency blowup event
Food
Fuel and gas
Electricity
Entertainment
Clothes
Vehicle
Pets
Other
My main concern in the event of a currency blowup is the access to food. I currently live in the heart of one of the largest cities in the United States. My only access to food is a Whole Foods a couple blocks away. I can’t grow food — there isn’t an ounce of dirt a mile away. In the event of a hyperinflationary event, there is likely to be food shortages and panic in massive urban areas, as we saw during the Weimar Republic era.
An ultimate downside case would moving back on the farm with my family. My family has over 20 acres of woods in a rural area. They grow their own food and we can hunt. My in-laws have even more with over 300 acres of farmland and timberland. Moving back in with my family because of food shortages in the city is the ultimate worst case scenario LOL.
To personally hedge myself from the event of moving back in with my parents (worst nightmare) my goal over the coming quarters is to start purchasing land.
Land in the rural Midwest heartland of the United States is nominally cheap. Check out this property.
Located in Cheboygan, Michigan on 272 acres. There is a home on the property so there is a possibility you can fix the home up and put it all on a 3.25% interest rate 30-year mortgage. The property has a large lake, farmland, timberland and a variety of animals to hunt.
This property is currently under contract, but all of the raw land in this general area seems like great value in the event of a currency collapse. Enough land and resources to live indefinitely if a long-tailed catastrophic even occurs.
I’m going to do some more digging into the monetization of raw land over the coming months. The space is new to me. Historically I have really only focused on public equities. The real estate market is a new venture. Something I’d like to dip my toes in. Here are a few things I am thinking about over the next couple of months.
Buying land and leasing it to hunters
Snowmobile designation using a house on acres as an Airbnb
Monetizing physical timberland with a professional timberland company
Carbon credits
Camping destination
Long-tailed inflation hedge
Farmland
Other?
If there are any professional land investors who follow this newsletter and would like to chat, shoot me a note. I think there is opportunity to rollup some land in the heartland of the United States. Very few institutional investors are doing it so anyone with professional investing experience could probably outperform.
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I took up a strategy similar to this a couple of years ago - call it the poor man’s version of the strategy you are describing. I’ve been hunting for small chunks of land in out-of-the-way places, buying auctioned parcels for bottom dollar. So far, I’ve picked up a half-acre near a lake in my home state of AR and a 1.25-acre piece a few hours north of where I live in Phoenix - both for about $700 a piece. I picked up an owner-financed 20 acres east of El Paso (near the Bezos playground) and plan to look for opportunities to monetise that if things stay good or hide out there if things go badly.
Same story, the family has some land but I’d rather do my own thing. I’ve taken the attitude that my real investments are things I can put a fence around and defend with a shotgun.
Glad to know others feel the same.
I have 40 acres in Alabama where I live and raise animals. Wooded acres in hilly areas are much cheaper than what is considered arable, because most rural land demand is driven by monocrop agriculture. You can also get semi arid land for real cheap in Southern Texas, need to be willing to run strict multi paddock grazing cycles to restore the productivity of the land though.